In its largest acquisition ever, Hubbell Inc., Orange, Conn., announced its plan to acquire U.S. Industries Inc.'s (USI) LCA Group Inc., the domestic lighting division of U.S. Industries Inc.
The acquisition of the USI Lighting package, which includes well-known lighting brands such as Progress, Architectural Area Lighting, Columbia, Dual-Lite, Kim, Moldcast, Prescolite and Spaulding, would give Hubbell Lighting a commanding presence in the residential lighting market and fill out its commercial and industrial lighting offerings. Progress Lighting is one of the biggest names in the residential market, and several of the other brands would add to Hubbell Lighting's specification business, particularly in the fluorescent, track, downlighting, and outdoor lighting markets. Other lines that would be acquired include emergency lighting, commercial outdoor fixtures and light-commercial decorative lighting fixtures.
The sale does not include USI's European lighting company, SiTeco.
LCA Group, with 3,500 employees and 12 factories, had 2001 sales of more than $575 million, according to Hubbell. Hubbell said it was too soon to comment on whether it would keep all of LCA Group's employees and its 12 plants open.
Lighting is one of Hubbell's core businesses, and the company anticipates LCA's brands will strengthen its place in the lighting fixture supply market.
“Lighting is one of our core businesses,” said Tim Powers, Hubbell's president and chief executive officer. “The well-established, quality brands of these two companies will form a broad portfolio of leading names that will move us into the top tier of lighting fixture suppliers. In addition, it further strengthens Hubbell's emphasis on specification-grade products across all of the diverse markets we serve.”
In a conference call with analysts on March 22, Powers said while the acquisition would give Hubbell definite strengths in specification brand and outdoor product brands, the Hubbell/LCA package would have less fluorescent content than some of the players ahead of them.
“While our fluorescent is strong enough in the package, it is certainly not the biggest part of the business. On the margin side that's a good thing. We're certainly not any competition at this point for Lithonia on fluorescent troffers. But for outdoor business, the specification business, and with Kim, Sterner, Architectural Lighting and Hubbell, we have a formidable lineup that will help us specify a lot of projects,” he said. “On the emergency and exit lighting side, Dual-Lite is the No. 1 brand in the business, and we feel that this will also be a strength in the package. And on the residential side, Progress is a business that's very strong.”
Powers said the company's focus on strategic lighting acquisitions is moving forward. “Hubbell Lighting Controls added the MyTech Corp. last October with its industry leadership in solid-state occupancy sensors. Earlier this month, we added Hawke International with its range of harsh and hazardous application products to our Killark and Chalmit operations that serve these same markets. The USI lighting group acquisition, once closed, will be a major and accretive step in our program.'”
U.S. Industries, with its subsidiaries, manufactures and distributes consumer and industrial products in two business segments: Bath and plumbing and Rexair.
David H. Clarke, chairman and chief executive officer of U.S. Industries, said, “This sale, which is a significant additional milestone in the plan to sell our non-core businesses, will enhance our opportunities for future strategic alternatives. We are pleased that the buyer is Hubbell and are confident their expertise in electrical products will benefit LCA's future.”
Howard Kozowsky, a principal of Power Lighting Systems Inc., Miami, and a Hubbell rep in the 1990s, said the proposed acquisition would be a good move for Hubbell and one that would strengthen the company's presence in all areas, except the HID/industrial market where it already had a strong position.
“It gives Hubbell a reason to stay in the lighting business at a very reasonable cost,” he said. “Otherwise, they would have been forced out of the lighting business by the other players that are out there. This way they have a reasonable foothold in the lighting business with the total volume of the two companies put together.”
Doug Carlson of C&O Sales, Overland Park, Kan., who represents Dual-Lite, said although Hubbell already has some emergency lighting, it will pick up a strong top-market leader with Dual-Lite.
“They're gaining specification power because Dual-Lite is very well specified. A lot of the other emergency product lines are only commodities, but Dual-Lite is often preferred in specifications. Packaging Dual-Lite has been something that a lot of the Dual-Lite reps could never do. They had Dual-Lite as an individual product line, rather than as a package. By being able to get Dual-Lite specified in a package, you have a better chance of holding a spec.”
Hubbell said it expects the transaction to close in the second quarter.